Supreme Court Skeptical of AT&T Patent Claims Against Microsoft

WASHINGTON – U.S. Supreme Court justices on Wednesday expressed doubts about whether Microsoft Corp. (MSFT) should be liable for infringing AT&T Inc. (T) patents in Windows software sold overseas, a case that could determine the reach of American patents in foreign markets.

Hearing arguments in the case, the justices sharply questioned AT&T's assertion that software code could be deemed a "component" of a computer, which would make overseas sales of the software an infringement under U.S. patent law.

Two justices expressed concern that a ruling against Microsoft could unintentionally subject other products sold overseas to U.S. patent law.

Justice Stephen Breyer said he would be "quite frightened of deciding for you and discovering that all over the world there are vast numbers of inventions that really can be thought of in the same way that you're thinking of this one."

The Microsoft-AT&T dispute is one of a series of important patent cases now before the court.

At issue is a ruling last year upholding a lower court decision that Microsoft was liable for infringing an AT&T patent for converting speech into computer code in copies of the Windows computer operating system sold overseas.

The U.S. Court of Appeals for the Federal Circuit said the world's largest software maker was liable for the unauthorized distribution of codec technology, used to compress speech signals into data, in copies of Windows overseas.

The U.S. Justice Department has sided with much of Microsoft's argument and said the appeals court ruling "improperly extends United States patent law to foreign markets" and puts U.S. software companies at a competitive disadvantage.